The challenge
As a nation, Australia needs to become more innovative to boost productivity. Making innovation investments can lead to something valuable; even if there is failure, the lessons learnt can still provide benefits. If innovation stalls, productivity growth will remain low and that's a big problem for living standards in Australia.
The research
The National Innovation Index captures innovation trends and organisational output across the country. Information was collected from highly classified BLADE and PLIDA datasets, between 2006-07 and 2023-24. Unlike other international measures such as the OECD Frascati Manual, this Index is unique to Australia and produces a more nuanced and detailed measurement of innovation at a granular level. This Index provides a comprehensive big picture of how we are travelling as an innovative economy. Unlike a survey sample, this Index encompasses all ABN and ACN data in Australia.
The impact
This research enhances the understanding of how knowledge is transformed, through business, into higher standards of living for people around the world
We examine the determinants of productivity and the characteristics of industries as they evolve. To increase productivity, firms must change – that is innovate – and we test for why businesses do and do not chose to innovate; what are the repercussions from innovating and how prudent government and corporate policy can crafted to optimise the type and level of innovation. By emphasising clarity; robustness and veracity, we aim to identify stylised facts about how societies become more productive.
Orthodox economic theory often treats innovation or technical progress as manna from heaven; firms move rapidly to the technological frontier and knowledge, once created, disperses rapidly throughout the economy. Although this abstraction of how innovation occurs may be reasonable in some branches of economics; it is unhelpful for studies of productivity growth.
In our research, we eschew notions of instant competitive equilibrium and hyper-rationality and investigate how firms actually behave. Why are some firms consistently below the technological frontier? Why do some firms choose not to change and what are the main obstacles? How risky is innovation and what role does the ecosystem play? Should governments intervene in the various ecosystems?
Our researchers
Paul Jensen, Trevor Kollmann, Beth Webster
Our partner
Commonwealth Bank of Australia